IT Audit Manual IT Audit Manual Volume III 31. AUDIT OF ERP SYSTEMS Introduction 1.1 Enterprise Resource Planning (ERP) is a high-end solution featuring integration of information technology and business application. The ERP solutions seek to streamline and integrate operational processes and information flows in the organization to integrate the resources namely Personnel, Inventory, Finance and Manufacturing through information technology. A system that provides seamless integration between all of these functions into a single system, designed to serve the needs of each different department within the enterprise is called ERP. Thus in an ERP solution the whole is greater than the sum of its parts. An ERP system spans multiple departments in an organizations and in some cases an ERP will also transcend the organizational boundary to incorporate systems of partners and suppliers as well, to bring in additional functions like supply chain management. Each implementation is unique and is designed to correspond to the implementer's various business processes. Evolution of ERP 1.2 In the ever competitive environment increasing demands are placed on organizations like aggressive cost control initiatives, need to analyze costs / revenues on a product or customer basis, flexibility to respond to changing business requirements, more informed management decision making and changes in the various ways of doing business. However, many hurdles in the growth of any business exist, such as difficulty in getting accurate data, timely information and improper interface of the complex business functions. To overcome these hurdles and achieve growth in business and depending upon the rate of change of the growing business needs, many applications, over a period of time, have been introduced by organizations such as - •Management Information Systems (MIS) •Integrated Information Systems (IIS) •Executive Information Systems (EIS) •Corporate Information Systems (CIS) •Enterprise Wide Systems (EWS) •Material Resource Planning (MRP) •Manufacturing Resource Planning (MRP II) •Money Resource Planning (MRP III) 1.3 As automated solutions were developed to cater to different activities of organizations it was only a matter of time before somebody thought of integrating

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